Teradyne Reports Fourth Quarter and Fiscal Year 2020 Results


GAAP to Non-GAAP Earnings Reconciliation

(In millions, except per share amounts)
																		Quarter Ended
					December 31, 2020			% of Net Revenues										September 27, 2020			% of Net Revenues								December 31, 2019			% of Net Revenues

Net revenues					$	759.0												$	819.5										$	654.7

Gross profit GAAP					$	449.8			59.3	%								$	458.9		56.0	%							$	383.2		58.5	%
		Inventory step-up				-			-										0.1		0.0	%								0.1		0.0	%
Gross profit non-GAAP					$	449.8			59.3	%								$	459.0		56.0	%							$	383.3		58.5	%

Income from operations - GAAP					$	234.1			30.8	%								$	269.7		32.9	%							$	171.7		26.2	%
		Restructuring and other (1)				(15.1	)		-2.0	%									(27.7	)	-3.4	%								(2.1	)	-0.3	%
		Acquired intangible assets amortization				5.8			0.8	%									6.2		0.8	%								9.8		1.5	%
		Equity modification charge				0.8			0.1	%									-		-									-		-
		Inventory step-up				-			-										0.1		0.0	%								0.1		0.0	%
Income from operations - non-GAAP					$	225.6			29.7	%								$	248.3		30.3	%							$	179.5		27.4	%

												Net Income per Common Share											Net Income per Common Share											Net Income per Common Share
					December 31, 2020			% of Net Revenues				Basic			Diluted			September 27, 2020			% of Net Revenues		Basic			Diluted			December 31, 2019			% of Net Revenues		Basic			Diluted
Net income - GAAP					$	196.3			25.9	%		$	1.18		$	1.05		$	222.7		27.2	%	$	1.34		$	1.21		$	125.1		19.1	%	$	0.75		$	0.69
		Restructuring and other (1)				(15.1	)		-2.0	%			(0.09	)		(0.08	)		(27.7	)	-3.4	%		(0.17	)		(0.15	)		(2.1	)	-0.3	%		(0.01	)		(0.01	)
		Acquired intangible assets amortization				5.8			0.8	%			0.03			0.03			6.2		0.8	%		0.04			0.03			9.8		1.5	%		0.06			0.05
		Interest and other (2)				3.7			0.5	%			0.02			0.02			3.6		0.4	%		0.02			0.02			18.5		2.8	%		0.11			0.10
		Pension mark-to-market adjustment (2)				7.7			1.0	%			0.05			0.04			2.7		0.3	%		0.02			0.01			7.7		1.2	%		0.05			0.04
		Equity modification charge				0.8			0.1	%			0.00			0.00			-		-			-			-			-		-			-			-
		Inventory step-up				-			-				-			-			0.1		0.0	%		0.00			0.00			0.1		0.0	%		0.00			0.00
		Exclude discrete tax adjustments (3)				(2.1	)		-0.3	%			(0.01	)		(0.01	)		(4.4	)	-0.5	%		(0.03	)		(0.02	)		1.4		0.2	%		0.01			0.01
		Non-GAAP tax adjustments				(3.9	)		-0.5	%			(0.02	)		(0.02	)		2.2		0.3	%		0.01			0.01			(7.7	)	-1.2	%		(0.05	)		(0.04	)
		Convertible share adjustment (4)				-			-				-			0.06			-		-			-			0.06			-		-			-			0.03
Net income - non-GAAP					$	193.2			25.5	%		$	1.16		$	1.10		$	205.4		25.1	%	$	1.24		$	1.18		$	152.8		23.3	%	$	0.91		$	0.88

GAAP and non-GAAP weighted average common shares - basic						166.1													166.0											167.3
GAAP weighted average common shares - diluted						186.8													184.3											181.8
		Exclude dilutive shares related to convertible note transaction				(10.0	)												(9.2	)										(7.3	)
Non-GAAP weighted average common shares - diluted						176.8													175.2											174.5

(1	)	Restructuring and other consists of:
					Quarter Ended
					December 31, 2020													September 27, 2020											December 31, 2019
			Contingent consideration fair value adjustment		$	(15.3	)											$	(27.2	)									$	(2.8	)
			Acquisition related expenses and compensation			(0.9	)												(1.1	)										0.2
			Employee severance			1.1													0.5											0.5
			Contract termination settlement fee			-													-											-
			Other			-													0.1											-
					$	(15.1	)											$	(27.7	)									$	(2.1	)


(2	)	For the quarters ended December 31, 2020, September 27, 2020, and December 31, 2019, Interest and other included non-cash convertible debt interest expense. For the quarters ended December 31, 2020, September 27, 2020, and December 31, 2019, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. For the quarter ended December 31, 2019, adjustment to exclude impairment charge related to Realwear.

(3	)	For the quarters ended December 31, 2020, September 27, 2020, and December 31, 2019, adjustment to exclude discrete income tax items.

(4	)	For the quarters ended December 31, 2020, September 27, 2020, and December 31, 2019, the non-GAAP diluted EPS calculation adds back $1.3 million of convertible debt interest expense to non-GAAP net income, and non-GAAP weighted average diluted common shares include 8.9 million, 7.8 million, and 5.4 million shares, respectively, from the convertible note hedge transaction.

					Twelve Months Ended
					December 31, 2020			% of Net Revenues										December 31, 2019			% of Net Revenues

Net Revenues					$	3,121.5												$	2,295.0

Gross profit GAAP					$	1,785.7			57.2	%								$	1,339.8		58.4	%
		Inventory step-up				0.4			0.0	%									0.4		0.0	%
Gross profit non-GAAP					$	1,786.1			57.2	%								$	1,340.2		58.4	%

Income from operations - GAAP					$	928.4			29.7	%								$	553.7		24.1	%
		Acquired intangible assets amortization				30.8			1.0	%									40.1		1.7	%
		Restructuring and other (1)				(13.2	)		-0.4	%									(13.9	)	-0.6	%
		Inventory step-up				0.4			0.0	%									0.4		0.0	%
		Equity modification charge (2)				0.8			0.0	%									2.1		0.1	%
Income from operations - non-GAAP					$	947.2			30.3	%								$	582.4		25.4	%

												Net Income per Common Share											Net Income per Common Share
					December 31, 2020			% of Net Revenues				Basic			Diluted			December 31, 2019			% of Net Revenues		Basic			Diluted
Net income - GAAP					$	784.1			25.1	%		$	4.72		$	4.28		$	467.5		20.4	%	$	2.74		$	2.60
		Acquired intangible assets amortization				30.8			1.0	%			0.19			0.17			40.1		1.7	%		0.24			0.22
		Interest and other (3)				14.4			0.5	%			0.09			0.08			28.7		1.3	%		0.17			0.16
		Pension mark-to-market adjustments (3)				10.3			0.3	%			0.06			0.06			8.2		0.4	%		0.05			0.05
		Restructuring and other (1)				(13.2	)		-0.4	%			(0.08	)		(0.07	)		(13.9	)	-0.6	%		(0.08	)		(0.08	)
		Inventory step-up				0.4			0.0	%			0.00			0.00			0.4		0.0	%		0.00			0.00
		Equity modification charge (2)				0.8			0.0	%			0.00			0.00			2.1		0.1	%		0.01			0.01
		Exclude discrete tax adjustments (4)				(15.2	)		-0.5	%			(0.09	)		(0.08	)		(22.6	)	-1.0	%		(0.13	)		(0.13	)
		Non-GAAP tax adjustments				(11.9	)		-0.4	%			(0.07	)		(0.07	)		(16.7	)	-0.7	%		(0.10	)		(0.09	)
		Convertible share adjustment (5)				-			-				-			0.25			-		-			-			0.11
Net income - non-GAAP					$	800.5			25.6	%		$	4.82		$	4.62		$	493.8		21.5	%	$	2.90		$	2.86

GAAP and non-GAAP weighted average common shares - basic						166.1													170.4
GAAP weighted average common shares - diluted						183.0													179.5
		Exclude dilutive shares from convertible note				(8.5	)												(4.9	)
Non-GAAP weighted average common shares - diluted						174.5													174.6

(1	)	Restructuring and other consists of:
					Twelve Months Ended
					December 31, 2020													December 31, 2019
			Contingent consideration fair value adjustment		$	(23.3	)											$	(19.3	)
			Contract termination settlement fee			4.0													-
			Acquisition related expenses and compensation			2.5													2.5
			Employee severance			2.3													2.9
			Other			1.2													-
					$	(13.2	)											$	(13.9	)

(2	)	For the twelve months ended December 31, 2019, selling and administrative expenses include an equity charge for the modification of Teradyne's retired CFO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement.

(3	)	For the twelve months ended December 31, 2020 and December 31, 2019, Interest and other included non-cash convertible debt interest expense. For the twelve months ended December 31, 2020 and December 31, 2019, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. For the twelve months ended December 31, 2019, adjustment to exclude impairment charge related to Realwear.

(4	)	For the twelve months ended December 31, 2020 and December 31, 2019, adjustment to exclude discrete income tax items. For the twelve months ended December 31, 2019, income tax (benefit) provision includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne's 2015 Federal tax return and includes a $15 million tax provision related to the finalization of our toll tax charge.

(5	)	For the twelve months ended December 31, 2020 and December 31, 2019, the non-GAAP diluted EPS calculation adds back $5.3 million and $5.2 million, respectively, of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 7.0 million and 2.7 million shares, respectively, from the convertible note hedge transaction.

GAAP to Non-GAAP Reconciliation of First Quarter 2021 guidance:

GAAP and non-GAAP first quarter revenue guidance:								$720 million			to	$780 million
GAAP net income per diluted share								$	0.86			$	1.00
		Exclude acquired intangible assets amortization							0.03				0.03
		Exclude non-cash convertible debt interest							0.02				0.02
		Tax effect of non-GAAP adjustments							(0.01	)			(0.01	)
		Convertible share adjustment							0.06				0.06
Non-GAAP net income per diluted share								$	0.95			$	1.11

For press releases and other information of interest to investors, please visit Teradyne's homepage at http://www.teradyne.com.
			Contact:	Teradyne, Inc.
				Andy Blanchard 978-370-2425
				Vice President of Corporate Relations

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